Low-cost warrior CavinKare reboots for better profits

Wednesday, June 12, 2013

Three years ago when Chennai-based consumer products maker CavinKare decided to shift its focus from low-priced goods to premium products, it was clear the company had embarked on a journey to reinvent itself.

CavinKare was known for catering to the bottom of the pyramid. Started as a small partnership firm from a village near Chennai in 1983, it pioneered the concept of selling shampoos in sachets at a time when shampoos were available only in bottles. In no time, it swept through the rural market, forcing others such as market leader Hindustan Unilever to follow suit. As of last year, 87 per cent of shampoos sold in the country were in sachets, of which CavinKare had 25-30 per cent share. Also, until three years ago, nearly 80 per cent of CavinKare’s revenue came from low-priced goods.

However, now the company is in the midst of redesigning itself, changing its growth strategy and rejigging the top management as it plans to become a Rs 3,000-crore company in three years. It had a turnover of Rs 1,200 crore in 2012-13. To fuel this growth, the company has raised Rs 250 crore from ChrysCapital, the private equity fund. Besides, it has also changed its value proposition from offering low-end products for the rural market to premium products that offer the promise of higher margins (CavinKare is a closely held company, so its financials are not in the public domain).